US economy created 143,000 jobs in January

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

The US economy created 143,000 jobs in January, falling short of forecasts, but a fall in the unemployment rate and robust gains in earnings underscored the strength of America’s labour market.

While January’s figure undershot expectations in a Reuters poll of a 170,000, the Bureau of Labor Statistics also revised up the bumper figure for December, from 256,000 to 307,000.

Economists and traders highlighted a decline in the unemployment rate to 4 per cent in January, down from 4.1 per cent the previous month, which they said bolstered the Fed’s case to proceed slowly with rate cuts.

Friday’s jobs data came just over a week after the Fed kept rates on hold at 4.25 to 4.5 per cent, despite pressure from US President Donald Trump to lower borrowing costs.

Diane Swonk, chief economist at KPMG US, said the fall in unemployment – and increased participation in the labour market – provided “more reason for the Fed to feel comfortable” in its decision to slow the pace of rate cuts this year.

Average hourly earnings also increased 4.1 per cent over the past 12 months, which economists took as a sign of the persistent health of the US labour market.

Markets expect the next Fed rate cut to arrive by July, with a 60 per cent chance of another by the end of the year, little changed from the expectations before the jobs report.

The two-year Treasury yield, which tracks interest rate expectations and moves inversely to price, rose 0.06 percentage points to 4.26 per cent, while the 10-year yield added 0.04 percentage points to 4.48 per cent.

Stock futures extended small declines, with contracts tracking the S&P 500 down 0.2 per cent.